Extent of powers of advocate commissioner appointed by the Magistrate under u/s.14 of SARFAESI Act

1. The CMM/DM exercise only judicial function which is ministerial in nature. There is difference between judicial function and adjudicatory function.Sec.14(3) of the Act provides for immunity to the CMM/DM. For this reason Sec.14 does not confer power to CMM/DM for deciding any dispute of whatsoever nature, of any person. Hence service of any notice to any one including borrower is not contemplated in Sec. 14 of the Act as no adjudication of dispute takes place before the CMM/DM.

2. The employment of any physical power to dispossess even in terms of a statute or enforceable order could be only had in exercise of the police power of the State. Even a Court does not have the power to dispossess by force through its officer, but has the power to secure it only through the police machinery of the State. The DM has to exercise the power by himself and cause the relief to be worked out under his control.Prior to the recent amendment the Magistrate had no power to delegate his powers to take possession. The then existing provision is extracted and reproduced herein below for a glance:

3. “(2) For the purpose of securing compliance with the provisions of sub-section (1), the Chief Metropolitan Magistrate or the District Magistrate may take or cause to be taken such steps and use, or cause to be used, such force, as may, in his opinion, be necessary”.

4.  The following few recent amendments are relevant for discussion.

5. “(1A) The District Magistrate or the Chief Metropolitan Magistrate may authorise any officer subordinate to him,—

(i) to take possession of such assets and documents relatingthereto; and

(ii) to forward such assets and documents to the secured creditor.”;

(c) in sub-section (3), after the words “the District Magistrate”, the words “any officer authorised by the Chief Metropolitan Magistrate or District Magistrate” shall be inserted.

6. It is clear from the above amendment that delegation of powers of DM/CMM to any officer authorised by DM/CMM is permissible. So this provision keeps open to the Magistrate to authorise his subordinate or any advocate commissioner. Advocate commissioner is considered as officer of the court. Even prior to the amendment the Hon’ble  Madras High Court held that, the Magistrate can appoint Advocate-Commissioner for identification and taking possession of the secured assets if necessary by taking help of police [Indian Overseas Bank Vs. Sri Aravind Steels Ltd. 2009 (1) CTC 341=AIR 2009 Mad.10.]

7. The advocate commissioner does not derive grater power than the Magistrate. When the Magistrate himself cannot step into shoes of authorised officer to perform his functions as per the Rules framed under the Act, the question of advocate commissioner exceeding powers is not known to law. The maximum assistance the advocate commissioner can give to authorised officer is to stand by the side of him and ensure that the authorised officer does not face any sort of threat from borrower or his agents in performing his action according to prescribed law (S.I.(E) Rules 2002 and provide police force in case of need.

8. There are several instances where, the advocate commissioners are stepping into the shoes of the authorised officers and performing functions of authorised officer. They are recording Panchanama (APPENDIX-I)and Inventory (APPENDIX-II) without following the Rules. Their presence is required only to use police force in case of need if borrower offers resistance while taking possession leaving Authorised Officers under wrong impression that, they need not take any action since they are totally replaced by the advocate commissioners appointed by the Magistrate. During scrutiny of action the tribunal may give a finding that the Authorised officer has not followed the Rules at all and this kind of actions would be squarely covered by the Latin maxim “expressio unius est exclusio alterius (= perform action as per the law prescribed or do not perform at all) and ultimately set aside the entire action.

9. The advocate commissioner appointed by DM/CMM cannot step into the shoes of the Authorised Officer and perform all the functions under Rule 4 or 8 of S.I.(E) Rules. This would lead to vitiation of the entire action under Sec.13(4) of SARFAESI Act.

This is my personal opinion and I invite comments from the members on the subject.